Brokers have started to tune out of engines giant Rolls-Royce as the impact of a profit warning earlier this month and some big deals by the blue chip firm cause a rethink of the investment case for the stock.

Barclays downgraded its rating for Rolls as it warned that slow growth anticipated by management would continue for longer than expected.

‘Slow growth over the next two years, high exposure to a single yet-to-enter service aircraft, significant cash and margin headwinds, accounting concerns, and questions over capital allocation lead us to our “underweight” rating,’ it said in a note.

Barclays
cut its target price for Rolls-Royce to 930p from 1225p, a move which
followed on from a reduction in its target on Thursday by JP Morgan
Cazenove. Rolls shares were down 12p to 1001p.

At
the start of this month, Rolls-Royce revealed that currency movements
would knock £40m off its revenue and £300m off its profits over the
current year.

The
company, which makes the vast bulk of its sales overseas, said that
excluding the forex hit and a one-off charge of around £30m in its
marine division over ‘product quality’, it was on course for flat
profits.

The
engine maker has also been involved in some high-price deal-making over
the past few months. In March it agreed a £1.9bn deal to buy 50-50
joint venture partner Daimler out of their German diesel engine
business. And at the end of April, Rolls revealed it was in talks with
German industrial giant Siemens over the sale of its energy gas turbine
and compressor business for around £900m. Those discussions are ongoing.

Heightened
concerns over the tense situation in Ukraine hurt overall market
sentiment, with the Footsie dropping back from an 11-week high to close
down 24.68 points at 6,814.57. The FTSE 250 index shed 83.3 points to
end at 15,885.21. The market falls came despite more encouraging news
from the UK economy, with factory output growth of 1.4 per cent in March
representing the best quarter for manufacturers since 1999.

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Among
other broker changes, banking giant Barclays was in focus as analysts
responded to its plans to take the axe to 19,000 jobs by 2016.

JPMorgan
raised its price target to 305p from 285p and kept its rating at
overweight on the stock, while Citi also put a 305p target on the
shares, down a shade from 315p, but reiterated its buy rating. Citi said
Barclays’ revised strategy was sensible, although shares still slipped
2.3p to 260.15p after gains yesterday. Property developer British Land
gained 1.5p to 712.5p after completing its first letting at Marble
Arch House in London’s West End despite broker Liberum downgrading its rating
to hold from buy.

The
biggest rise in the top flight came from Marks & Spencer, which
added 9p to close at 458.4p after the latest weekly John Lewis sales
figures showed strong growth in clothing, especially womenswear.

M&S will post annual results on May 20, with traders seeing a possible rally into this announcement.

Interdealer
broker Tullett Prebon was the biggest mid cap faller after it unveiled a
cost-cutting programme to deal with falling revenues, which were down
12 per cent in the first four months of the year. It blamed subdued
trading activity, low volatility, and uncertainty over the impact of new
regulations for its customers, especially in the US.

At
the same time it is spending $160m to buy London-based broker PVM Oil
Associates to boost its presence in the crude oil trading market.
Tullett shares dropped 18.5p to 297.2p while rival Icap was 12.7p lower
at 388.7p.

Among
the tiddlers, oil explorer Wessex Exploration saw its share leap 0.32p
higher to 1.05p after confirming that it is in advanced talks over a
potential acquisition. Wessex said the deal would add a prospective
offshore asset in the Far East to its portfolio.

In
other resources deals, Aminex was wanted after it reached agreement in
principle to sell its US operation to Northcote Energy and privately
owned Springer Oil and Gas. Aminex shares firmed 0.4p to 0.76p, while
Northcote remained steady at 0.62p.

Also
on the takeover trial was Keywords, a provider of technical expertise
to the video games industry, as it unveiled the €13m acquisition of
Binari Sonori, an Italian provider of voiceover and translation
services. Keywords shares were 2p higher at 162.5p.

And
investors took a shine to African gold recovery specialist Goldplat as a
return to profitability in the third quarter helped its shares hold
steady at 4.5p.

SerVision
shares jumped 0.25p to 3.38p after the digital security systems
developer signed a contract with a headline value of $4m, substantially
more than its market capitalisation of around $2.7m.

The AIM-listed firm’s devices, which stream video using the mobile
phone network, will be installed on buses, and are already being used by
G4S and Royal Mail in their cash-handling operations.